July 24 (Reuters) - A trading suspension in the stock of little-known Cynk Technology, which mysteriously surged 20,000 percent before the halt, ends late on Thursday, but do not expect to see the stock trading again on Friday.
Shares of the Belize-based social media company, which were traded on over-the-counter exchanges until the suspension on July 11, soared over a few weeks despite having no revenue and being described as a “development stage” company. At one point, Cynk was worth more than $6 billion.
The swiftness of the rally in what had been a little-traded penny stock prompted a temporary suspension by the U.S. Securities and Exchange Commission that expires at 11:59 p.m. EDT (03:59 GMT) Thursday.
The suspension was implemented to protect investors, according to the SEC. Since then, there has been no comment from the company nor regulator, and no new information has emerged to explain the stock’s meteoric rise.
As the suspension expires, brokerages said the chances of the stock resuming trading are slim at best.
More than likely, the stock will only ever again trade in the so-called “gray market,” because no brokerage firm is likely to be willing to make a market in the shares. Without a broker to quote or advertise the stock, it can be nearly impossible to locate shares to trade.
Brokerages wanting to market the stock must file a form with FINRA, explaining that they are satisfied with any updated information.
Cromwell Coulson, president and chief executive at OTC Markets Group, which operates the OTC Pink market on which Cynk had traded, said last week the stock is not likely to be publicly quoted again because no broker will be able to file the appropriate paperwork with regulators.
Among the investors hurt by the sudden rally were those shorting the shares - borrowing and selling in expectation of it dropping. That can be dangerous with stocks that have little liquidity, like Cynk, that go on a sudden run. Shares at one point hit $21.95 on July 10 before closing at $13.90 that day, the last day it was traded.
The SEC and the Financial Industry Regulatory Authority, or FINRA, which imposed the suspension, both declined to comment on Thursday.
Reporting By Suzanne Barlyn and Rodrigo Campos; Writing by David Gaffen; Editing by Cynthia Osterman